Maybe Germany Actually Wants Cyprus to Leave the Euro

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I was noodling over Cyprus last night and a thought occurred to me. Maybe, from the perspective of Germany and the other core EU countries, a default and exit from the euro would be a good thing.

I’m not really serious about this, but here’s the pitch. Cyprus is tiny enough that default and exit wouldn’t have any actual effect on the broader EU economy. It would be a rounding error. And because (a) Cyprus is tiny, (b) Cyprus adopted the euro only five years ago, and (c) Cyprus has a unique status as an offshore banking haven for Russian billionaires, it would be fairly easy to convince the financial community that their default is a special case that doesn’t have any broader implications for the eurozone.

So the eurozone would be OK. But if Cyprus chooses this route, the Cypriot economy is going to be in shambles. Sure, in the long run, they might do OK by readopting the pound and devaluing it, but in the short term it would be ruinous. Residents wouldn’t just lose 6.5 percent of their savings, they’d lose something like a third of their purchasing power thanks to recession and devaluation. It would be a long, grinding disaster.

And perhaps that would be a very pointed object lesson for voters in Greece and Spain and Portugal that default and exit is even worse than the austerity the EU is insisting on. The implicit message would be: You might not like it, but you better go along if you know what’s good for you. Just look at what happened to Cyprus.

So….from the German perspective, Cyprus could provide a very cheap demonstration of the dangers of calling their bluff. Who knows? Maybe they think that would be worth it. This should give Cypriots pause for thought.

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THE FACTS SPEAK FOR THEMSELVES.

At least we hope they will, because that’s our approach to raising the $350,000 in online donations we need right now—during our high-stakes December fundraising push.

It’s the most important month of the year for our fundraising, with upward of 15 percent of our annual online total coming in during the final week—and there’s a lot to say about why Mother Jones’ journalism, and thus hitting that big number, matters tremendously right now.

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So we’re going to try making this as un-annoying as possible. In “Let the Facts Speak for Themselves” we give it our best shot, answering three questions that most any fundraising should try to speak to: Why us, why now, why does it matter?

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